Rewards do not match the risk

fosters.com

Writer

Posted Mar. 13, 2013 at 3:15 AM

Posted Mar. 13, 2013 at 3:15 AM

Since the voters rejected the Route 236 sewer project last June, the Board of Selectman has held firm on support for this project and spending of $8.9 millions. While making a major effort to find grounds for your support, you have done little to explore the reasons for rejection by the majority of the voters. Before once again taking a firm stance supporting this project, please consider these concerns.

The first concern is making sure that the revenue from the Route 236 TIF District will be sufficient to pay the basic fundamental costs to the town. With that question answered, we could then move to the likelihood of successful development and lastly, the desirability and benefits of that development.

Before the fundamental question of revenue versus costs can be answered, outstanding questions need to be answered in a conclusive manner. On the revenue side, there is the issue of depreciation and revenue from the MNP compressor station. The original TIF document, voted on by the town, indicated a decline in value of nearly 50% by the compressor station over a 30-year period. Today, the town is promoting estimates of revenue that include no depreciation of the compressor station at all. There has been no explanation for this sudden change of over $16 million in depreciation. The credibility of such information must be put into question without adequate documentation.

This leaves a serious question about revenue being sufficient to cover fundamental costs of the bond, sewer upgrades and maintenance and lost revenues created by the TIF tax sheltering of MNP tax revenues. Once data has been developed that supports revenue equal to these costs, we have merely reached the “break even” point for the taxpayers.

The town has had more than 3 years to develop a case for this project but has never paid to have any professional data developed for any kind of a cost/benefits analysis, development feasibility studies or any kind of projections for development potential for a very limited geographical area. The very recent draft report from Peabody Consultants did little to strengthen the argument for a sound financial analysis and merely provides comparison data for retail centers along the turnpike. It may have worked in the movie “Field of Dreams” but “build it and they will come” is not a financial development strategy.

The legality of any of the existing sewer repairs of $1.2 million being funded through the TIF is currently before the town’s attorney. There are grave concerns that development failure could leave only existing residential sewer users to pay for future maintenance and upgrading costs of the new sewer that now will be joined with the old one. Also looming like a dark cloud is the potential 25 million dollars to upgrade the Kittery treatment plant to comply with EPA standards for nitrogen release. Eliot would be responsible for 16.7% of these costs and who would pay if development doesn’t happen? Existing residential sewer users of course and then town taxpayers are the only pockets to reach into. Would these costs for sewer fees discourage development?

The entire question of “successful development” in this currently weak economic environment should concern even optimistic supporters. The characteristics that make Eliot such a desirable place to live are the very things that make development more difficult. Eliot is located near the coast, near the retail Mecca of the Kittery outlets and across the river from tax-free New Hampshire. Because of that, we already enjoy better economic conditions than most of the 45 communities along the turnpike that have a sewer system. Could Eliot overcome this poor investment environment, the competition from Route 1 in Kittery and tax-free New Hampshire with Pease Development Authority? What makes Eliot so attractive for investment dollars?

After the “successful development” question is answered, then comes the volume of development needed to provide Eliot with any tax relief. At today’s mil rate, a $39 million evaluation would provide only $42 of tax relief to the average home. No revenues from these TIF properties will provide any relief to the town’s general fund for at least 30 years. The only certain immediate beneficiaries will be the Commons and other property owners on Route 236. The Commons has its own TIF and that development will not pay one dime for the construction costs of the new sewer. Ninety-five percent of all tax revenues from new development at the Commons will be returned to them and only 5% will go to the town’s general fund.

Last but not least, successful development on Route 236 could change the feel of the “rural character” of Eliot forever and put tremendous traffic burdens on Goodwin and State roads. Is that worth a hundred bucks off our tax bills? There is a risk potential for this project that does not match the limited rewards.